Retail giant Costco wins dismissal of prawn lawsuit over Thai forced labor

NEW YORK (Thomson Reuters Foundation) - A U.S. federal judge has dismissed a lawsuit claiming that retailer Costco Wholesale Corp. had knowingly sold frozen prawns, the farming of which involved forced labor in Thailand.

A Costco Wholesale retail club is photographed in Austin, Texas, U.S. on December 12, 2016. REUTERS/Mohammad Khursheed

Judge Jeffrey White ruled that the plaintiffs failed to establish that the world’s second largest retail chain was bound to inform customers that modern-day slavery could be part of its supply chain.

The lawsuit, filed in 2015, claimed U.S.-headquartered Costco was aware the prawns it bought from its Southeast Asian producers came from a supply chain dependent on ships involved in human trafficking and labor abuses.

“The facts described in the (complaint) are tragic and ‘raise significant ethical concerns’,” White wrote on Tuesday in an order to dismiss the case, held in Oakland, California.

But “plaintiffs fail to allege (Costco) had a duty to disclose the information about labor abuses in the supply chain ... on its product packaging,” he added.

The case against Costco, which is run as a members’ warehouse, was filed by club member Monica Sud, a California resident, as a proposed class-action lawsuit with Sud arguing it could affect millions of customers in her state.

Exporter C.P. Food Products Inc and its parent company, Thailand’s Charoen Pokphand Foods, PCL. were also named as defendants in the case.

Charoen Pokphand Foods said in a statement emailed through its public relations representatives that it condemned “all aspects of human trafficking and forced labor.”

“CP Foods is not – and has never been – an owner or operator of fishing vessels that used forced labor as alleged in the lawsuit,” the company said.

Attorneys representing the plaintiffs and other defendants did not immediately respond to requests for comment.

Sud along with fellow Costco customers alleged that Costco purchased farmed prawns, also known in the industry as shrimp, from the Southeast Asian seafood producers despite knowing they used ships manned by slave laborers.

The complaint followed investigations by Britain’s Guardian newspaper and the Associated Press into the shrimp supply chain. The probe found that large numbers of men were brought and held against their will on fishing boats off Thailand that were used to farm prawns sold in some of the world’s leading supermarkets.

The Guardian found Charoen Pokphand Foods was buying fishmeal to feed to its farmed prawns from some suppliers that owned, operated or brought from fishing boats staffed by slaves.

But in dismissing the lawsuit, the judge said the plaintiffs could not trace the prawns they bought to the suppliers in question.

Judge White dismissed the lawsuit with prejudice, meaning that it cannot be brought again.

The plaintiffs had filed their lawsuit under a California state law that prohibits unfair competition through misleading advertising.

Last year, the U.S. State Department’s Trafficking in Persons report removed Thailand from the bottom rung despite what it described as “widespread forced labor” in the country’s vital seafood industry.

Globally, nearly 21 million people are victims of forced labor, according to the International Labour Organization.